COMMENTARY

An arena of no help to Detroit; a tax cut of no help to Mich.

3/7/2014

BY JACK LESSENBERRYBLADE OMBUDSMAN

Lessenberry

DETROIT — Want two glaring examples of why many liberals — as well as conservatives — think government doesn’t work anymore?

Consider these: The bankrupt City of Detroit is paying to build a hockey arena and entertainment center for a billionaire, and stands to get nothing in return. Nobody yet knows how the city’s bankruptcy process will play out, or how much pensioners will be hurt.

Everybody agrees that the city doesn’t have enough money to provide basic services: not enough police, not enough emergency vehicles, firefighters, or ambulances.

But Detroit’s Downtown Development Authority thinks city taxpayers should pay for a new arena for the Ilitch family, which owns the Detroit Red Wings. (Forbes magazine estimates Mike and Marion Ilitch’s worth at $3.2 billion.) Funding for the deal is complex, and some of the cost apparently will be reimbursed by the state.

But taxpayers will have to spend more than $260 million, largely from property taxes, to build the arena. That’s an estimated 58 percent of the total cost.

The city also sold the Ilitch family all the land it needs for $1. Granted, it was largely blighted land nobody else wanted anyway.

This will be the second time since 1979 that the city has built an arena for the Red Wings. Currently, the city gets a share of the proceeds from Joe Louis Arena, about $7 million a year.

How much will the city get from the arena it is building for the billionaire family? Nothing. Olympia Development of Michigan, the Ilitch family’s holding company, gets all the ticket revenue, and all the money from the parking lots and concession stands.

So what’s in it for Detroit? Well, the hope, as one newspaper put it, is that the arena will “serve as an economic catalyst in a blighted area.” Nice theory. Except the evidence indicates it won’t work.

University of Chicago economist Allen Sanderson, who studies how sports affect communities, concluded that “if you want to inject money into the local economy, it would be better to drop it from a helicopter than invest it in a new ballpark.”

Last month, Detroit City Council happily voted to approve the deal. Lawmakers cheerfully turned over 39 parcels of land to the Ilitches, with no strings attached and no compensation.

What wasn’t clear is: What were they thinking?

● That bit of irrationality may soon be topped by the Michigan Legislature. Lawmakers in the state Senate and House are trying to rush bills through that would cut the state income tax rate.

State Sen. Jack Brandenberg, a Republican from suburban Detroit, wants to slash the rate from 4.25 percent to 3.9 percent over three years. House Republicans want a slightly smaller rollback. Both bills seem well on the way to passage.

What’s wrong with that? Even though there is a temporary budget surplus now, the state doesn’t have enough money to cover its basic needs, as the proliferation of potholes and the soaring cost of college tuition plainly shows.

Also, people don’t want a tax cut. A recent poll found citizens evenly divided on whether any surplus should be used for schools (38 percent) or roads (36 percent.) Some thought the surplus should be used for other state needs.

A tax cut was favored by only 11 percent. That figure might be even smaller if people realized that for most of them, Mr. Brandenberg’s cut would be essentially meaningless.

According to the nonpartisan Michigan League for Public Policy, the tax rollback would amount to only $88 a year for an average family. The lowest fifth of wage earners would see their taxes cut, on average, by a mere $12 a year.

However, taxpayers in the famous one percent would get an average extra $2,618 a year. Meanwhile, the state Senate Fiscal Agency calculated the reduction would cost the state $871 million in revenue every year. In other words, this tax cut helps almost nobody.

Has this given lawmamkers pause? Not on your life. Worried about primary challenges from antitax Tea Party fanatics, the tax cutters are moving — regardless of the evidence — full speed ahead.

So much for serving the interests of the people.

● John Dingell, the longest-serving congressman in the history of the Republic, has made it official: He is calling it a career after this term. The man who arrived in Congress in 1955 will leave in 2015 — an amazing achievement.

The front-runner to succeed him is his much younger wife, Debbie Dingell, a member of the Democratic National Committee, one of Wayne State University’s elected board members, and a longtime political power player in Michigan.

Should the 60-year-old Ms. Dingell win and stay in office nine terms — an easily imaginable feat — Michigan will have had a Dingell in Congress for an entire century, starting with the current congressman’s father, who arrived with the New Deal in 1933.

Jack Lessenberry, a member of the journalism faculty at Wayne State University in Detroit and The Blade’s ombudsman, writes on issues and people in Michigan.